Opinion
Argued September 15, 1983
October 27, 1983.
Workmen's compensation — Attorney fees — Reasonableness of contest — Scope of employment — Penalties — Delay — Pennsylvania Workmen's Compensation Act, Act of June 2, 1915, P.L. 736.
1. Attorney fees are properly denied a successful workmen's compensation claimant when the employer had a reasonable basis for the contest and presented evidence in support of its contention that the injury occurred when the employe was outside the scope of her employment. [125]
2. In the absence of violations of the Pennsylvania Workmen's Compensation Act, Act of June 2, 1915, P.L. 736, or applicable regulations, a refusal of a referee to impose penalties upon an employer for unreasonable delay is proper. [126]
Argued September 15, 1983, before Judges CRAIG, BARRY and BLATT, sitting as a panel of three.
Appeal, No. 673 C.D. 1982, from the Order of the Workmen's Compensation Appeal Board and Liquor Control Board et al., in case of Ella G. Ehrhart v. Pennsylvania Liquor Control Board, No. A-81907.
Petition to the Department of Labor and Industry for workmen's compensation benefits, counsel fees and penalties. Benefits awarded. Counsel fees and penalties denied. Claimant and employer appealed to the Workmen's Compensation Appeal Board. Petition for supersedeas filed by employer. Petition for supersedeas denied. Decision affirmed. Claimant appealed to the Commonwealth Court of Pennsylvania. Held: Affirmed. Application for reargument filed and denied.
P. Nelson Alexander, for petitioner.
John W. English, Jr., with him Gary F. DiVito, Chief Counsel, and Paul Dufallo, for respondents.
This case comes here on appeal, pursuant to Section 763(a)(1) of the Judicial Code, 42 Pa. C. S. § 763(a)(1), from an order of the Workmen's Compensation Appeal Board (Board) affirming the referee's order denying payment of attorney fees and assessment of a penalty.
On November 25, 1975, Ella Ehrhart (claimant) incurred back injuries while in the course of her employment for the Pennsylvania Liquor Control Board (employer). After a series of delays, a referee handed down a decision on July 17, 1981 ordering payment of total disability benefits but denying both payment of attorney fees and imposition of a penalty.
The claimant asserts that attorney fees should have been assessed pursuant to Section 440 of the Pennsylvania Workmen's Compensation Act (Act), Act of June 2, 1915, P.L. 736, as amended, 77 P. S. § 996, which provides as follows:
In any contested case where the insurer has contested liability in whole or in part, the employe or his dependent, as the case may be, in whose favor the matter at issue has been finally determined shall be awarded, in addition to the award for compensation, a reasonable sum for costs incurred for attorney fees. . . . Provided, that cost for attorney fees may be excluded when a reasonable basis for the contest has been established.
Whether or not an employer's contest is a "reasonable one" is a question of law. Stone Container Corp. v. Workmen's Compensation Appeal Board, 50 Pa. Commw. 384, 413 A.2d 17 (1980). The primary question in determining the reasonableness of an employer's contest is whether the contest was brought to resolve a genuinely disputed issue or merely for purposes of harassment. Workmen's Compensation Appeal Board v. Denny, 25 Pa. Commw. 395, 360 A.2d 306 (1976); Landis v. Workmen's Compensation Appeal Board, 43 Pa. Commw. 491, 402 A.2d 723 (1979). As a defense to the present action, the employer argued that the injury was not within the claimant's scope of employment. To support this proposition, evidence was offered indicating that the injury occurred while the employee was engaging in activity which was not part of her normal duties and which she was not ordered to do. Such evidence goes directly to the scope of employment and, furthermore, leads to the conclusion that the employer's contest was to dispute a genuine issue and not merely to harass the claimant.
Because we affirm the Board in concluding that a reasonable basis for the contest was presented, we need not decide if the purported sua sponte raising of attorney fees by the referee was inconsistent with Cooper-Jarrett, Inc. v. Workmen's Compensation Appeal Board, 61 Pa. Commw. 12, 432 A.2d 1128 (1981).
The claimant also argues that a penalty should be imposed for excessive and unreasonable delay pursuant to Section 435 of the Act, 77 P. S. § 991(d)(i), which provides that:
The department, the board, or any court which may hear any proceeding brought under this act shall have the power to impose penalties as provided herein for violations of the provisions of this act or such rules and regulations or rules of procedure:
Employers and insurers may be penalized a sum not exceeding ten per centum of the amount awarded and interest accrued and payable: Provided, however, that such penalty may be increased to twenty per centum in cases of unreasonable or excessive delay.
The Board, citing Cooper-Jarrett, Inc. v. Workmen's Compensation Appeal Board, 61 Pa. Commw. 12, 432 A.2d 1128 (1981), ruled that a penalty should not be assessed because the claimant had failed to request it from the referee and the referee may not assess a penalty sua sponte. Cooper-Jarrett, however, held that attorney fees could not be assessed sua sponte by the referee. And a plain reading of Section 435 of the Act indicates that the department, the board or any court, hearing any proceeding brought under this act, shall have power to impose penalties. In this case, however, we must follow Glagola v. Workmen's Compensation Appeal Board, 59 Pa. Commw. 80, 428 A.2d 1016 (1981), wherein we held that a penalty may not be imposed under Section (d) absent proof of a violation of the Act or of the rules of the department or board. Neither a violation of the Act nor violations of the department or board were found here by the referee, nor does our analysis disclose any violations. We must conclude therefore that the denial of penalties was proper.
We will affirm the decision of the Board.
ORDER
AND NOW, this 27th day of October, 1983, the order of the Workmen's Compensation Appeal Board in the above-captioned matter is hereby affirmed.